Question

Finance the formula in exercise 17 is the formula for computing simple interest, where I is interest P is principle of amount invested, r is the interest rate and t is the same tm in years. Find the amount of interest earned if you were to invest $5000 at 6% interest for 3 years.

Answer 1

$900

Explanation:

Given that:

Principal, p = 5000

Interest, r = 6%

Period, t = 3 years

Using the relation :

Simple interest = Principal * Rate * Time

Simple interest = $5000 * 0.06 * 3

Simple interest = $900

Hence, amount of interest earned = $900